Listed Firms Amass Record Cash Reserves

Korea's listed firms hold record cash reserves as their profits recover in the wake of the global financial crisis, but they remain reluctant to invest the hoard.

The Korea Exchange on Monday said 555 listed companies held cash reserves amounting to W78.8 trillion (US$1=W1,156) as of late September, up W9.39 trillion or 13.5 percent from late last year. This was the highest since statistics were compiled for the first time in 2004. Cash reserves are cash and short-term money market instruments with a maturity of less than a year.

The listed firms held a mere W46 trillion in cash reserves in 2004. But the amount increased to W63 trillion in 2007 to W69 trillion in late last year on the strength of increased profits for the enterprises. The amount will likely grow to near W80 trillion by year's end as many more businesses are hoarding cash rather than investing amid the global financial crisis.

The cash reserves held by the 10 largest business groups increased by W5 trillion from W43.66 trillion late last year to W48.61 trillion as of late September this year. Of the 10 largest groups, POSCO saw the largest increase of some W2.85 trillion. Next was the Hyundai-Kia Automotive Group (W2.81 trillion), Samsung Group (W2.12 trillion) and Lotte Group (W1.3 trillion). By contrast, the Kumho Asiana Group, which is restructuring, saw its cash reserves dwindle by W2.64 trillion.